Property management encompasses rental management , wherein the former also includes facilities management and could also involve the operations within a body corporate setup .
1
Managing Residential &
Commercial Property ? There is a huge difference between managing a residential and a commercial property . In a residential property , it is commonly known that the landlord would fix the property and hand it over to the tenant for use as a place of residence . And when the contract terminates , the tenant is expected to return the property as they found it or better .
Whereas , in commercial property , the tenant may receive the property as a white box or without much character and they would then convert it into what the business requires and be branded accordingly to represent the business . The leases for commercial properties usually have a longer duration than residential properties .
2
Ensuring Compliance & Professional Management
of a Property It is important that real estate agencies understand legislation surrounding rental property rights for both tenants and landlords . These would generally be the Rental Housing Act ( RHA ), the Consumer Protection Act ( CPA ) as well as the Estate Agency Code of Conduct .
3
Landlord ' s Mistakes on Rental Management of a Property ? Paradoxically , the first and foremost aspect the landlord has to look out for is who they mandate to rent the property out on their behalf . If the ideal property practitioner is appointed , they ensure that they clarify processes and responsibilities of all parties in the rental agreement , so that when the process starts , there are no surprises .
The landlord must also ensure that they understand the mandate given to the agent , understand the lease agreement and whether the agreement with the agent is merely from procurement of a tenant or to include managing the rental on a monthly basis .
Some of the mistakes could be where a landlord relies entirely on the rental income to service the bond or to pay other expenses ; hence every landlord should leave room for vacancy and no rent income periods . This means that a landlord must have cash reserves to mitigate instances where tenants have delayed payment or not paid . Landlords should also realise that when the property is in a bad condition where they are responsible for the repairs , and this doesn ’ t happen , then the damages continue and this could devalue the property or cause the required restoration costs to skyrocket .
SA Real Estate Investor Magazine NOV 2021 35
BOUTIQUE ASSET-BACKED INVESTMENTS
Fixed Annual Returns On Capital
FSP 13370
ACTIVE INVESTMENT INFORMATION
ENDULINI CONSTRUCTION FUNDING - PHASE 2
INVESTMENT SUMMARY
RISK PROFILE
LOW
MEDIUM
MEDIUM
HIGH
MARKET ANALYSIS
RISK ANALYSIS
Investors are invited to provide funding for Endulini, a residential The site of the development is very well located. Brackenfell is a
development in the suburb of Brackenfell in Cape Town. The Developer popular and safe residential area in the Northern Suburbs of Cape
has started with the development of the project comprising 61 sectional Town. The development is surrounded by houses and townhouses in
title apartments within a secure gated environment. The installation of what is an established, traditional area. In addition, the development
the services is complete and the units in Phase 1 are in construction. is in proximity to the Cape Gate regional shopping centre, the Cape
24 Units in Phase 1 have been sold. Funding required for Phase 2 of the Gate Medi-Clinic private hospital, Kuils River Golf Course, Curro
project is R 9 500 000, with the minimum investment amount limited to School and large flagship amenities such as Checkers Hyper and
R 100 000. Investments receive fixed returns calculated as follows: Pick n Pay Hypermarket
project timelines. Investment level R 100 000 - R 499 000 (14% p/a) This is an exceptionally desirable residential area and the demand
Rollover/Reinvestment options at end of term Investment level R 500 000 - R 999 000 (16% p/a) for 2-bedroom units is high, catering to a broad market of owner-
Investment level R 1000 000 plus occupiers, investors and renters.
LOW
MEDIUM
HIGH
INVESTMENT TERM (PROJECTED)
1YR
2YR
3YR
4YR
5YR
The length of the investment is an approximation – based on
(18% p/a)
This remains one of the best
The returns are paid out with the initial capital at the end of the
rentals alike.
investment cycle. Unique to the offering is a double-tier security
structure, made up of a 1st covering bond over the development land
access to the funding of residential development projects. The result and a linking of the investment to a specific unit/s in the development
being fixed per annum returns based on pre-determined, projected as security. The protection of investor funds is managed by the Noble
time-frames with fixed capital assets employed to protect invested funds. Shield 1 Security Trust. The investment period is projected to be for
Project in high demand area of CT
Developer
Risk Developer cannot access funds
without independent authorisation
Project in high demand price category
Investor not linked to Devco via
shareholding
Operational
Risk Financial - specific funds allocation
Investor Risk Investment is asset-backed
Underlying investment project
As can be seen by chart
155
supply
Estate Freehold
investment as security is transferred to the end-buyer of the property,
A 2-tier structure is employed to protect invested funds, which includes 1st
Covering bond over the development to protect investors. Investments
Freehold
Estate
Sectional
title Freehold Apartment Complex either have the funds repaid to them or to roll their investment funds Freehold over into subsequent investment cycles to prolong the investment. are backed by fixed assets within the underlying investment project. Until
investors are repaid the assets are their security. This is elaborated upon
Sectional Scheme with more detailed documentation and in discussion.
14% - 18% per annum
(dependent on level of investment AMT)
Min Investment
R 100 000
Total investment requirement
R 9 500 000
654
THE ENDULINI DEVELOPMENT
Endulini will be a secure access-controlled complex. The homes
development is beautifully located on the crest of a hill, with most
INVESTMENT FEES The funds aim is
units being afforded uninterrupted views. This development falls in an
established area undergoing rapid expansion on its outskirts to cater
All returns quoted net of fees. for the huge demand of the middle-income community. The demand
Fees absorbed by Development Company for 2-bedroom units in established, safe areas such as this is very high.
The properties are aimed at the predominant middle-income sector
5 YEAR INVESTMENT PERFORMANCE
(AS P/A % RETURNS) VS CPI
with apartments falling within the R 1.25 - R 1.5 Million range. This broadly
ensures the properties will be in the pricing category which is among
5 Year investment performance (as p/a % returns) vs CPI
25
the most popular and highly absorbable in the greater Cape Town
area.
20
15
10
5
CPI
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021
INVESTMENT CONSIDERATION
GROWTH AND ACTIVITY
are all 2-bedroom properties with a choice of 1 or 2 bathrooms.
All units will include a patio or balcony with a braai. The site of the
CPI
INVESTMENT SECURITY
accrued interest. At this time investors may exercise their option to
at which stage the Attorneys will repay the investor capital plus
Western Cape
OPC
Period
– sectional title properties
Endulini development -
Brackenfell, Cape Town,
Geographic Location
Cost increases factored in
Funds flow via Attorneys
1393
Individual investors exit when the completed unit linked to their
Real Estate
Abundance of labour supply
Pre-determined returns for investor
(apartments) are in short
KEY INVESTMENT INFORMATION
Classification
RISK
NEGATED
Investor liquidity - access to funds
Title STOCK IN AREA
COMPOSITION Chart
OF PROPERTY
approximately 12 months.
Market Risk
performing middle-income residential areas in SA for sales and
The aim is to provide private investors alternative diversification with
0
RISK AREAS
Experienced team driving all aspects
INVESTMENT OBJECTIVE
Investment Returns
POTENTIAL
RISKS
The unique structure of the investments has been crafted to offer
attractive returns within a risk-managed investment environment. While
the team of experts do a great deal to ensure the timely completion of
projects, property development does have some unique risks: Therefore
the invitation is to investors who understand (i) the nature of these
Total Property Value (R'000)
250 000
200 000
investments, (ii) the security structures and (iii), where this investment fits
into their larger profile.
150 000
100 000
50 000
0
2011
2012
2013
2014
2015
2016
Sectional Scheme
2017
Erf
2018
2019
2020
2021
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